Yum China Results

Yum China Reports Q2 Same-Store Sales Growth of 3% and Operating Profit Growth of 64%; Loyalty Members Surpassed 100 Million; Mobile Payment Exceeded 40% of Total Company Sales

Total system sales grew 7%, including growth of 8% at KFC and 7% at Pizza Hut - Same-store sales grew 3%, including growth of 4% at KFC, flat at Pizza Hut.

Yum! Brands

Yum China Holdings, Inc. (NYSE:  YUMC) today reported unaudited results for the second quarter ended May 31, 2017. 

Second Quarter Highlights

  • Total system sales grew 7%, including growth of 8% at KFC and 7% at Pizza Hut, excluding foreign currency translation ("F/X"). 
  • Same-store sales grew 3%, including growth of 4% at KFC, flat at Pizza Hut. 
  • Opened 90 new restaurants during the quarter. 
  • Total restaurant margin increased 2.7 percentage points to 15.3%, primarily due to the impact of retail tax structure reform and also driven by same-store sales leverage, partially offset by wage inflation and commodity inflation. 
  • Operating profit increased 64%, and 73% excluding F/X, primarily due to the impact of retail tax structure reform and also driven by same-store sales leverage. F/X negatively impacted reported operating profit by $8 million. 
  • Net income increased 39% to $107 million. 
  • Adjusted EBITDA increased 15% to $259 million. 
  • Basic EPS increased 33% to $0.28 and diluted EPS increased 29% to $0.27.  

1 Beginning with the quarter ended May 31, 2017, Pizza Hut Casual Dining and Pizza Hut Home Service were combined and reported together as the Pizza Hut reportable segment. Segment financial information for prior periods has been re-cast to align with this change in segments.

Key Results

 

Second Quarter

Year to Date

% Change

% Change

System

Same-Store

Net New

Operating

System

Same-Store

Net New

Operating

Sales

Sales

Units

Profit

Sales

Sales

Units

Profit

Yum China

7

3

6

64

6

2

6

34

KFC

8

4

5

41

6

3

5

20

Pizza Hut

7

-

9

157

8

1

9

95

Second Quarter

Year to Date

(in US$ million, except

for per share data and 

percentages)

 

2017

 

2016

% Change

 

Ex F/X

 

2017

 

2016

% Change

Reported

Reported

Ex F/X

Operating Profit

$143

$   87

64

73

$397

$  296

34

41

Net Income

$107

$   77

39

46

$282

$  222

27

34

Adjusted EBITDA

$259

$ 226

15

21

$579

$  505

14

21

Basic EPS

$0.28

$0.21

33

39

$0.73

$0.61

20

25

Diluted EPS

$0.27

$0.21

29

35

$0.71

$0.61

16

23

 

Note: All comparisons are versus the same period a year ago. Consistent with prior years, Yum China's fiscal second quarter includes March, April and May results. Percentages may not recompute due to rounding. 

System sales and same-store sales percentages exclude the impact of F/X. Adjusted EBITDA is a non-GAAP financial measure. See Reconciliation of Reported Results to Non-GAAP Measures included in the accompanying tables of this release for further details. 

CEO Comments

"I am pleased with our overall performance during the quarter, with same-store sales up 3% and system sales up 7%, on the back of continued strength at KFC. Operating profit, restaurant margin and net income all showed robust improvement." said Micky Pant, CEO.  

"We are committed to building one of the world's leading restaurant companies, and are executing against a plan that we have developed towards this goal. We are making progress in the key themes we are investing in – loyalty programs, digital and delivery capabilities, and continued upgrade of restaurant assets and optimization of store formats.  We are pleased to report some encouraging results: loyalty members for KFC and Pizza Hut have surpassed 100 million in total, and mobile payment exceeded 40% of our company sales in the second quarter.  Over 4,900 of our restaurants offered delivery service. Delivery sales accounted for 13% of company sales in the second quarter.

We also completed the acquisition of an 80% stake, on a fully diluted basis, in Daojia, an online aggregator platform with two brands focusing on higher-end delivery market segment, for a cash consideration of $36.7 million to the selling shareholders and a capital contribution of $25 million to Daojia.  We see this acquisition as complementary to our existing delivery business, and it provides valuable operational and technological expertise."

New-Unit Development and Asset Upgrade

  • Opened 90 new restaurants during the second quarter, and 223 year to date. 
  • Remodeled 197 restaurants during the second quarter, and 229 year to date, led by KFC. 

 

New Units

Restaurant Count

Second

Quarter

 

Year to Date

As of Second Quarter End

2017

2016

Yum China

90

223

7,685

7,246

KFC

62

134

5,301

5,039

Pizza Hut

25

64

2,122

1,949

Little Sheep, East Dawning and Taco Bell

3

25

262

258

Total Restaurant Count

 

Restaurant Count

As of Second Quarter End

2017

2016

Restaurants

7,685

7,246

Company-owned

6,103

5,800

Unconsolidated Affiliates

854

811

Franchisees

728

635

Restaurant Margin

  • For the second quarter, restaurant margin for Yum China increased 2.7 percentage points to 15.3%. Year to date, restaurant margin for Yum China increased 3.1 percentage points to 18.7%. Margin expansion was primarily due to the impact of retail tax structure reform and also driven by same-store sales leverage, partially offset by wage inflation and commodity inflation. 

 

Second Quarter

Year to Date

2017

2016

% ppts

change

2017

2016

% ppts

change

Yum China

15.3

%

12.6

%

2.7

18.7

%

15.6

%

3.1

KFC

16.0

%

13.8

%

2.2

19.4

%

17.2

%

2.2

Pizza Hut

13.9

%

10.4

%

3.5

17.5

%

12.4

%

5.1

Digital and Delivery

  • Driven by our digital initiatives, we continued to strengthen our loyalty membership programs. By the end of the second quarter, total members in our loyalty programs surpassed 100 million, including 83 million members for KFC and 26 million for Pizza Hut. 
  • Mobile payments exceeded 40% of company sales in the second quarter of 2017. Over $900 million in company sales were settled by cashless payment methods during the quarter. 
  • Over 4,900 restaurants across China offered delivery services as of the end of the second quarter. Delivery contributed about 13% of company sales in the second quarter.

Completed Acquisition of Daojia

  • During the second quarter, Yum China completed the acquisition of a controlling interest in the holding company of DAOJIA.com.cn ("Daojia"), an established online food delivery service provider. Founded in 2010, Daojia targets higher-end orders in four Tier 1 cities. Daojia also operates Sherpa's, a leading premium food delivery platform specializing in English speaking services.   
  • Yum China agreed to pay cash consideration of $36.7 million to the sellers and made a concurrent capital contribution of $25.0 million to Daojia. As of the completion of the acquisition, Yum China held 90% of Daojia's outstanding shares of common stock, or 80% of its equity interests on a fully-diluted basis. Mr. Hank Sun, founder of Daojia, will continue to lead the business. 
  • The acquisition marks another step in executing Yum China's strategy to accelerate growth by building know-how and expertise in delivery. Daojia is complementary to Yum China's existing delivery business, and it provides valuable operational and technological expertise.

 Share Repurchase Update

  • Year to date ended May 31, 2017, we repurchased approximately 1 million shares for $39 million at an average price of $36.27 per share.  

About Yum China Holdings, Inc. 

Yum China Holdings, Inc. is a licensee of Yum! Brands in mainland China. It has exclusive rights in mainland China to KFC, China's leading quick-service restaurant brand, Pizza Hut, the leading casual dining restaurant brand in China, and Taco Bell, which opened its first restaurant in China at the end of 2016. Yum China also owns the Little Sheep and East Dawning concepts outright. Yum China is well positioned for growth thanks to its strong competitive position, integration of its brands into Chinese popular culture and consumers' daily lives, expanding geographic footprint in China and existing operational expertise. It has a strong capital position, no external debt and expects to continue growing its system sales and profit by adding new restaurants and through growing same-store sales. Yum China had more than 7,600 restaurants and more than 420,000 employees in over 1,100 cities at the end of May 2017. A new generation of younger consumers who are digitally sophisticated and brand driven are fueling growth in consumption in China. The ongoing growth of the middle class and urban population in China is expected to create the world's largest market for restaurant brands, with Yum China poised to be the market leader.

Yum China Holdings, Inc.

 

Condensed Consolidated and Combined Summary of Results

 

 

 

 

(amounts in US$ million, except for number of shares and per share amounts)

(unaudited)

Quarter ended

% Change

Year to date ended

% Change

             5/31/2017

            5/31/2016

B/(W)

             5/31/2017

            5/31/2016

B/(W)

Revenues

Company sales

$

1,563

$

1,558

$

2,820

$

2,836

(1)

Franchise fees and income

31

30

6

58

55

6

Total revenues

1,594

1,588

2,878

2,891

Costs and Expenses, Net

Company restaurants

Food and paper

453

462

2

798

847

6

Payroll and employee benefits

358

342

(5)

615

587

(5)

Occupancy and other operating expenses

513

558

8

879

960

8

Company restaurant expenses

1,324

1,362

3

2,292

2,394

4

General and administrative expenses

107

104

(4)

174

170

(2)

Franchise expenses

15

17

12

28

31

11

Closures and impairment expenses, net

17

31

47

17

31

47

Refranchising gain, net

(1)

(1)

(73)

(2)

(4)

(67)

Other income, net

(11)

(12)

(1)

(28)

(27)

7

Total costs and expenses, net

1,451

1,501

3

2,481

2,595

4

Operating Profit

143

87

64

397

296

34

Interest income, net

5

2

66

7

4

59

Income Before Income Taxes

148

89

64

404

300

34

Income tax provision

(35)

(16)

        NM

(111)

(78)

(40)

Net income – including noncontrolling interests

113

73

55

293

222

32

Net income (loss) – noncontrolling interests

6

(4)

        NM

11

        NM

Net Income – Yum China Holdings, Inc.

$

107

$

77

39

$

282

$

222

27

Effective tax rate

22.9

%

18.6

%

(4.3)

ppts.

27.4

%

26.2

%

(1.2)

ppts.

Basic Earnings Per Common Share

$

0.28

$

0.21

33

$

0.73

$

0.61

20

Weighted average shares outstanding

387,901,955

363,758,219

        NM

387,754,681

363,758,219

        NM

Diluted Earnings Per Common Share

$

0.27

$

0.21

29

$

0.71

$

0.61

16

Weighted average shares outstanding

397,326,233

363,758,219

        NM

396,679,703

363,758,219

        NM

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

29.0

29.6

0.6

ppts.

28.3

29.9

1.6

ppts.

Payroll and employee benefits

22.9

21.9

(1.0)

ppts.

21.8

20.7

(1.1)

ppts.

Occupancy and other operating expenses

32.8

35.9

3.1

ppts.

31.2

33.8

2.6

ppts.

Restaurant margin

15.3

%

12.6

%

2.7

ppts.

18.7

%

15.6

%

3.1

ppts.

Operating margin

9.1

%

5.6

%

3.5

ppts.

14.1

%

10.5

%

3.6

ppts.

Percentages may not recompute due to rounding.

 

Yum China Holdings, Inc.

KFC Operating Results

(amounts in US$ million)

(unaudited)

Quarter ended

% Change

Year to date ended

% Change

 5/31/2017

 5/31/2016

B/(W)

  5/31/2017

 5/31/2016

B/(W)

Revenues

Company sales

$

1,087

$

1,078

1

$

1,957

$

1,975

(1)

Franchise fees and income

29

29

4

55

53

4

Total revenues

1,116

1,107

1

2,012

2,028

(1)

Costs and Expenses, Net

Company restaurants

Food and paper

330

330

581

605

4

Payroll and employee benefits

236

223

(5)

403

382

(6)

Occupancy and other operating expenses

347

377

8

594

649

9

Company restaurant expenses

913

930

2

1,578

1,636

4

General and administrative expenses

39

38

(3)

64

62

(5)

Franchise expenses

14

17

13

27

31

12

Closures and impairment expenses, net

8

21

65

9

21

61

Other income, net

(12)

(8)

36

(27)

(22)

21

Total costs and expenses, net

962

998

4

1,651

1,728

4

Operating Profit

$

154

$

109

41

$

361

$

300

20

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

30.3

30.5

0.2

ppts.

29.7

30.6

0.9

ppts.

Payroll and employee benefits

21.7

20.7

(1.0)

ppts.

20.6

19.3

(1.3)

ppts.

Occupancy and other operating expenses

32.0

35.0

3.0

ppts.

30.3

32.9

2.6

ppts.

Restaurant margin

16.0

%

13.8

%

2.2

ppts.

19.4

%

17.2

%

2.2

ppts.

Operating margin

14.1

%

10.1

%

4.0

ppts.

18.4

%

15.2

%

3.2

ppts.

Percentages may not recompute due to rounding.

 

Yum China Holdings, Inc.

Pizza Hut Operating Results

(amounts in US$ million)

(unaudited)

Quarter ended

% Change

Year to date ended

% Change

5/31/2017

5/31/2016

B/(W)

5/31/2017

5/31/2016

B/(W)

Revenues

Company sales

$

467

$

465

1

$

846

$

832

2

Franchise fees and income

1

1

23

1

1

27

Total revenues

468

466

1

847

833

2

Costs and Expenses, Net

Company restaurants

Food and paper

120

127

6

212

232

9

Payroll and employee benefits

119

115

(5)

207

197

(5)

Occupancy and other operating expenses

163

175

7

279

301

7

Company restaurant expenses

402

417

3

698

730

4

General and administrative expenses

26

26

2

43

43

2

Franchise expenses

1

(21)

1

(13)

Closures and impairment expenses, net

9

11

21

8

10

21

Total costs and expenses, net

438

454

4

750

783

4

Operating Profit

$

30

$

12

157

$

97

$

50

95

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

25.8

27.5

1.7

ppts.

25.1

28.0

2.9

ppts.

Payroll and employee benefits

25.6

24.4

(1.2)

ppts.

24.5

23.6

(0.9)

ppts.

Occupancy and other operating expenses

34.7

37.7

3.0

ppts.

32.9

36.0

3.1

ppts.

Restaurant margin

13.9

%

10.4

%

3.5

ppts.

17.5

%

12.4

%

5.1

ppts.

Operating margin

6.6

%

2.6

%

4.0

ppts.

11.6

%

6.0

%

5.5

ppts.

Percentages may not recompute due to rounding.

 

Yum China Holdings, Inc.

Condensed Consolidated Balance Sheets

(amounts in US$ million, except for number of shares)

5/31/2017

12/31/2016

ASSETS

(Unaudited)

Current Assets

Cash and cash equivalents

$

892

$

885

Short-term investments

310

79

Accounts receivable, net

74

74

Inventories, net

266

268

Prepaid expenses and other current assets

150

120

Total Current Assets

1,692

1,426

Property, plant and equipment, net

1,617

1,647

Goodwill

103

79

Intangible assets, net

105

88

Investments in unconsolidated affiliates

51

71

Other assets

287

254

Deferred income taxes

166

162

Total Assets

4,021

3,727

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Current Liabilities

Accounts payable and other current liabilities

966

971

Income taxes payable

36

33

Total Current Liabilities

1,002

1,004

Capital lease obligations

27

28

Other liabilities and deferred credits

260

252

Total Liabilities

1,289

1,284

Redeemable Noncontrolling Interest

5

Equity

Common stock, $0.01 par value; 1,000,000,000 shares authorized;

  386,617,759.42 shares and 383,344,835.42 shares issued at May 31, 2017

  and December 31, 2016, respectively; 384,760,471 shares and 383,344,835.42 shares

  outstanding at May 31, 2017 and December 31, 2016, respectively

4

4

Treasury stock

(59)

(20)

Additional paid-in capital

2,367

2,352

Retained earnings

322

40

Accumulated other comprehensive income

35

1

Total Equity – Yum China Holdings, Inc.

2,669

2,377

Noncontrolling interests

58

66

Total Equity

2,727

2,443

Total Liabilities, Redeemable Noncontrolling Interest and Equity

$

4,021

$

3,727

 

Yum China Holdings, Inc.

Condensed Consolidated and Combined Statements of Cash Flows

 

(amounts in US$ million)

 

 

 

 

(unaudited)  

Year to date ended

5/31/2017

5/31/2016

Cash Flows - Operating Activities

Net income - including noncontrolling interests

$

293

$

222

Depreciation and amortization

160

171

Closures and impairment expenses

17

31

Refranchising gain

(2)

(4)

Deferred income taxes

(1)

(29)

Equity income from investments in unconsolidated affiliates

(30)

(26)

Distributions of income received from unconsolidated affiliates

26

13

Share-based compensation expense

10

5

Changes in accounts receivable

3

(8)

Changes in inventories

7

(30)

Changes in prepaid expenses and other current assets

5

Changes in accounts payable and other current liabilities

7

35

Changes in income taxes payable

3

25

Other, net

(25)

18

Net Cash Provided by Operating Activities

473

423

Cash Flows - Investing Activities

Capital spending

(177)

(172)

Purchase of short-term investments

(229)

(54)

Proceeds from refranchising of restaurants

3

13

Acquisition of business, net of cash acquired

(25)

Other, net

(4)

(1)

Net Cash Used in Investing Activities

(432)

(214)

Cash Flows - Financing Activities

Net transfers to Parent

(118)

Payment of capital lease obligations

(1)

(1)

Repurchase of shares of common stock

(30)

Employee stock option proceeds

4

Other, net

(16)

Net Cash Used in Financing Activities

(43)

(119)

Effect of Exchange Rates on Cash and Cash Equivalents

9

(7)

Net Increase in Cash and Cash Equivalents

7

83

Cash and Cash Equivalents – Beginning of Period

885

425

Cash and Cash Equivalents – End of Period

$

892

$

508

Reconciliation of Reported Results to Non-GAAP Measures

(amounts in US$ million)

(unaudited)

In this press release:

  • The Company provides certain percentage changes excluding the impact of F/X. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations. 
  • System sales growth reflects the results of all restaurants regardless of ownership, including Company-owned, franchise and unconsolidated affiliate restaurants that operate our concepts, except for non-Company-owned restaurants for which we do not receive a sales-based royalty. Sales of franchise and unconsolidated affiliate restaurants typically generate ongoing franchise fees for the Company at a rate of approximately 6% of system sales. Franchise and unconsolidated affiliate restaurant sales are not included in Company sales on the Condensed Consolidated and Combined Statements of Income; however, the franchise fees are included in the Company's revenues. We believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth. 
  • Same-store sales growth is the estimated percentage change in sales of all restaurants that have been open and in the Company system one year or more. 
  • Company Restaurant profit ("Restaurant profit") is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales.  

In addition to the results provided in accordance with US Generally Accepted Accounting Principles ("GAAP") in this press release, the Company provides non-GAAP measures which present Operating Profit before Special Items, Diluted Earnings Per Common Share before Special Items, Effective tax rate before Special Items and Adjusted EBITDA, which we define as net income including noncontrolling interests adjusted for income tax, interest income, depreciation, amortization and other items, including store impairment charges. Special Items consist of provision for losses associated with the sale of the aircraft and impact of the redemption of the Little Sheep noncontrolling interest which are described in (a), (b) and (c) in the accompanying notes. The Company excludes impact from Special Items for the purpose of evaluating performance internally. Special Items are not included in any of our segment results. These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that we do not believe are indicative of our ongoing operations due to their nature. These non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial results, but should be read in conjunction with the unaudited Condensed Consolidated and Combined Summary of Results and other information presented herein. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures follows.

 

Quarter ended

Year to date ended

Detail of Special Items

5/31/2017

5/31/2016

5/31/2017

5/31/2016

Provision for loss associated with sale of aircraft(a)

$

$

(1)

$

$

(1)

Special Items Expense - Operating Profit

(1)

(1)

Special Items Expense, net of tax of nil

    - including noncontrolling interests

(1)

(1)

Special Items Expense, net of tax of nil

    - noncontrolling interests(b)

(8)

(8)

Special Items Income, net of tax of nil

    - Yum China Holdings, Inc.

$

$

7

$

$

7

Weighted average diluted shares outstanding

397,326,233

363,758,219

396,679,703

363,758,219

Special Items Diluted Earnings Per Common Share

$

$

0.02

$

$

0.02

Reconciliation of Reported Operating Profit to

   Operating Profit Before Special Items

Reported Operating Profit

$

143

$

87

$

397

$

296

Special Items Expense - Operating Profit

(1)

(1)

Operating Profit before Special Items

$

143

$

88

$

397

$

297

Reconciliation of Reported EPS to EPS Before

   Special Items

Reported Diluted Earnings Per Common Share

$

0.27

$

0.21

$

0.71

$

0.61

Special Items Diluted Earnings Per Common Share

0.02

0.02

Diluted Earnings Per Common Share before Special Items

$

0.27

$

0.19

$

0.71

$

0.59

Reconciliation of Reported Effective Tax Rate to

   Effective Tax Rate Before Special Items

Reported effective tax rate

22.9

%

18.6

%

27.4

%

26.2

%

Effective tax rate before Special Items(c)

22.9

%

18.6

%

27.4

%

26.2

%

(a)         During the quarter ended May 31, 2016, we recognized a loss of $1 million associated with the sale of the aircraft.

(b)         During the quarter ended May 31, 2016, the Little Sheep founding shareholders sold their remaining 7% Little Sheep ownership interest to the Company pursuant to their redemption rights. The difference between the purchase price of less than $1 million, which was determined using a non-fair value based formula pursuant to the agreement governing the redemption rights, and the carrying value of their redeemable noncontrolling interests was recorded as an $8 million loss attributable to noncontrolling interests.

(c)         Impact on effective tax rate as a result of Special Items was nil.

 

Reconciliation of Net Income to Adjusted EBITDA

(amounts in US$ million)

(unaudited)

Net income, along with the reconciliation to Adjusted EBITDA, is presented below.

Quarter ended

Year to date ended

5/31/2017

5/31/2016

5/31/2017

5/31/2016

Reconciliation of Net Income to Adjusted EBITDA

Net income (loss) – noncontrolling interests

$

6

$

(4)

$

11

$

Net Income – Yum China Holdings, Inc.

107

77

282

222

Income tax provision

35

16

111

78

Interest income, net

(5)

(2)

(7)

(4)

Operating Profit

143

87

397

296

Depreciation and amortization

96

103

160

171

Store impairment charges

20

35

22

37

Special Items Expense – Operating Profit

1

1

Adjusted EBITDA

$

259

$

226

$

579

$

505

 

Yum China Holdings, Inc.

Segment Results

(amounts in US$ million)

(unaudited)

Quarter Ended 5/31/2017

KFC

Pizza Hut

Others

Corporate

Total

and

Unallocated

Total revenues

$

1,116

$

468

$

10

$

$

1,594

Company restaurant expenses

913

402

9

1,324

General and administrative expenses

39

26

2

40

107

Franchise expenses

14

1

15

Closures and impairment expenses, net

8

9

17

Refranchising gain, net

(1)

(1)

Other income, net

(12)

1

(11)

962

438

12

39

1,451

Operating Profit (Loss)

$

154

$

30

$

(2)

$

(39)

$

143

Quarter Ended  5/31/2016

KFC

Pizza Hut

Others

Corporate

Total

and

Unallocated

Total revenues

$

1,107

$

466

$

15

$

$

1,588

Company restaurant expenses

930

417

15

1,362

General and administrative expenses

38

26

3

37

104

Franchise expenses

17

17

Closures and impairment expenses, net

21

11

(1)

31

Refranchising gain, net

(1)

(1)

Other income, net

(8)

(4)

(12)

998

454

17

32

1,501

Operating Profit (Loss)

$

109

$

12

$

(2)

$

(32)

$

87

The above tables reconcile segment information with our Condensed Consolidated and Combined Summary of Results.  

Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items.  

See Reconciliation of Reported Results to Non-GAAP Measures.

 

Yum China Holdings, Inc.

Segment Results

(amounts in US$ million)

(unaudited)

Year to date ended 5/31/2017

KFC

Pizza Hut

Others

Corporate

Total

and

Unallocated

Total revenues

$

2,012

$

847

$

19

$

$

2,878

Company restaurant expenses

1,578

698

16

2,292

General and administrative expenses

64

43

4

63

174

Franchise expenses

27

1

28

Closures and impairment expenses, net

9

8

17

Refranchising gain, net

(2)

(2)

Other income, net

(27)

(1)

(28)

1,651

750

19

61

2,481

Operating Profit (Loss)

$

361

$

97

$

$

(61)

$

397

Year to date ended 5/31/2016

KFC

Pizza Hut

Others

Corporate

Total

and

Unallocated

Total revenues

$

2,028

$

833

$

30

$

$

2,891

Company restaurant expenses

1,636

730

28

2,394

General and administrative expenses

62

43

4

61

170

Franchise expenses

31

31

Closures and impairment expenses, net

21

10

31

Refranchising gain, net

(4)

(4)

Other income, net

(22)

(1)

(4)

(27)

1,728

783

31

53

2,595

Operating Profit (Loss)

$

300

$

50

$

(1)

$

(53)

$

296

The above tables reconcile segment information with our Condensed Consolidated and Combined Summary of Results.  

Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items.  

See Reconciliation of Reported Results to Non-GAAP Measures.



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